The Association of British Insurers says the FCA will need to revisit its review of the annuity market after Chancellor George Osborne announced a fundamental overhaul of the pensions tax regime.

Osborne shocked the industry last week when he revealed plans to allow savers to take their entire pension pot as cash when they reach age 55.

ABI director of policy Huw Evans says the announcement will fundamentally change the retirement income market and require the regulator to rethink its annuities market study.

He says: “The FCA market study will need revisiting. While the FCA had line of sight on these announcements ahead of the Budget, it will now need to think through the scope, timing and purpose of its annuity market study.

“The regulator may say it wants to run in parallel with the Treasury’s changes but the rules of the game have been changed.”

Evans also suggests the reforms announced in the Budget could hamper Department for Work and Pension plans to encourage employers to set up “collective” defined contribution schemes.

He says: “Collective DC looks even more unlikely to get off the ground.

“Osborne’s move further defines the UK as an individualistic pension system, built around a customer’s right to choose their own retirement income, free from constraints.”

Evans also argues the levy to fund face-to-face guidance, proposed alongside the pension reforms, should be spread across the entire financial services industry.

Chase de Vere head of communications Patrick Connolly says: “The FCA will certainly have to stop and look again to make sure its review is appropriate because the changes announced by the Chancellor will completely alter the retirement income landscape.”

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